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on October 01, 2018 Employee Engagement

How to Calculate the ROI of Your Company’s Employee Engagement Program

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Anytime an investment is made, having a positive outcome and measuring the results is always the main goal. When it comes to Employe Engagement programs, it can often be difficult to measure this return on investment (ROI) as what "success means" can look different depending on the company.

Whenever you choose to make an investment, it is important to determine what you want out of it. If a company is investing more time and money into their employees, they will want to see clear ROI to decide whether to increase or decrease these investments. There are multiple measurable aspects of employment that can help you to better understand the true ROI based on program goals.

Employee Output

Many employers invest in employee engagement programs with the hopes that their employees will become much more productive if they feel more comfortable in their environment. There are a variety of ways to measure whether an employer is receiving the ROI they were looking for. Many find value in giving employees clear productivity goals then measuring how close each employee gets to reaching them. In addition, some may measure this productivity by comparing the tasks completed in one month to past months.

Turn Over Rates

Some employers invest in their employees in hopes to decrease the turnover rate. If people are happy in their workplace, they are less likely to leave. An effective employee engagement program can provide a solution to this problem by decreasing turnover rates.

There is a very particular formula that can measure this:

  • (Monthly Employee Separations) / (Average Monthly Employees) = % Turn Over
  • Divide the number of employee separations in one month by the average number of active employees at the site in the same period. This will offer a percentage to use and compare to other months to determine whether the employee engagement plan is effective for the goal. 

This method tends to be the most effective if the employer sets a goal percentage to work toward.

Actual Dollars

Perhaps one of the most effective ways to test ROI is through actual dollars. In a sense, this could be impacted by the above measurements. For example, when employees are more productive, they are likely generating a greater income for the company.

The equation should look like this:When measuring ROI through financial value, you will follow another formula:

Start by multiplying the time required for the process (T) the volume of units (V) and the Dollars required (D). You will then raise it to the power of the present current value. You will then subtract TVD raised to the power of the project value, determined by how a successful project will yield.

The equation should look like this:

  • TVD present - TVD project

This will help you better determine whether you have reached your projected ROI, and how far you might be from reaching it if you have not already.

Return on investment is one of the most important things to measure in the workplace to know whether your new initiative is working as projected. It is especially important to measure when you are trying a new employee engagement program so that you can understand the effectiveness of the program.

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Sydnie Kerr

Customer Content Manager